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What Technology Brands Should Learn from CPG Companies

CPG Brands May Not be as Sexy, but They're Leaders in Creating Shared Value

Coffee capsules on display in a Nespresso boutique in Dubai, United Arab Emirates. Credit: Duncan Chard/Bloomberg

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We've all heard the phrase "Consumer goods giants must copy technology companies." Media and marketing thought leaders have been urging the industry to think like a Google or behave like a Facebook for some time now.

It was similar at Cannes this year, with technology taking center stage and brands making sure they were seen worshipping at the altar of data and algorithms. But surely the end goal for all of us -- technology companies, brands and agencies -- is the same. I believe that to transform the way we engage with our consumers in this reshaped world, both technology and CPG brands will need to pay equal attention to each other.

If ever there was one category that has always used trailblazing tools including mining of insights and data, creation of sales-focused creative ideas and charting customer journeys, it has been the competitive CPG sector. However, for the longest time, consumer goods -- a reliable business sector with some of the soundest fundamentals -- has been anything but sexy. In fact, it's rather uncool. Why? Because it is not a social enterprise or run by entrepreneurs, and doesn't abide by the transformative and disruptive rules of today?

But what about the scope of dynamic thinking that is involved when trying to market one chocolate brand lying on the shelf over assorted rival brands? CPG companies have always known to focus on the whole product experience -- every single detail from the branding; to its packaging; to the store position; to its brand narrative; to the price; to making that one-to-one connection with the consumer; and to communicating its brand relevance and marketing its emotional impact. These all matter to a brand.

In my view, CPG brands can indeed learn a lot from technology companies, but at the same time can in return share some fundamental lessons on how to grow powerful, sustainable businesses, such as:

1. How to build and nurture an inclusive global culture that allows the company to expand and grow globally over decades, while being true to its core values.

2. How to deeply understand consumers and build a lasting relationship with them by using every element of the value chain to create sustainable value and competitive advantage.

3. How to build a "creating shared value" philosophy, which drives transformational and inclusive change in the communities they serve.

Evidence of this "creating shared value" can be seen in coffee, with brands such as Nescafe, Nespresso and Nescafe Dolce Gusto taking the lead to help small-scale farmers in rural areas, who could be trapped in a cycle of low productivity, poor quality, and environmental challenges that limit production volume. In response, Nestle has launched an aggressive plan to help develop farmer incomes and yields by working in public-private partnerships in markets as diverse as Vietnam, China, Kenya and Latin America.

Similarly, chocolate giants Mars and Mondelez have undertaken work with cocoa farmers to improve cocoa yields and farm incomes while ensuring that there are sustainable farming practices and no use of child labor. Mondelez's Cocoa Life is a global sustainability program through which $400 million will be invested in sustainable cocoa production, while Mars has funded Cocoa Sustainability, a site and program that exists separate from Mars.com to encourage sustainable practices within the cocoa and chocolate industries.

There was an extensive documentary on the overall subject by Richard Quest on CNN recently looking at challenges and progress in this area.

As these cases serve to illustrate, CPG brands can only sustainably create value for their shareholders if they simultaneously create value for their thousands of stakeholders along the value chain: farmers, business partners. trade partners and consumers -- and if they are able to revisit this value creation paradigm periodically to ensure there is still sustainable value being created.

So next time you are enjoying your favorite cup of coffee, or that brand of chocolate, or pick out your preferred cereal box from the kitchen cupboard, just remember that there is plenty these brands can teach us about how to run a successful dynamic business that is loved by consumers for generations.

In this article:

Nandu Nandkishore

Nandu Nandkishore is the former executive VP-executive board member of Nestle for Asia, Oceania and Africa, and is a non-executive board member of Blippar, an image recognition and augmented reality company.